Old Repub. Nat'l Title Ins. Co. v. Warner
| Decision Date | 20 December 2010 |
| Docket Number | Civil Action No. 1:10-CV-00071 |
| Parties | OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, Plaintiff. v. KRISTIAN E. WARNER. ANDREW M. WARNER. MONROE P. WARNER. Defendants. |
| Court | U.S. District Court — Northern District of West Virginia |
On or about April 30. 2010 Plaintiff. Old Republic National Title Insurance Company [ Old Republic] filed its complaint [DE 3] against Defendants Kristian E. Warner. Andrew M. Warner. and Monroe P. Warner [Warners].
Warners filed their Motion To Dismiss for lack of subject matter jurisdiction; failure to state a claim upon which relief can be granted; lack of ripeness; and failure to join an indispensable party on May 27. 2010 [DE 11].
Old Republic filed its Response [DE 13] on June 11. 2010.
By Order dated September 1. 2010. the matter was referred to the Magistrate Judge. the parties having consent to magistrate judge jurisdiction pursuant to 28 U.S.C. §636 (c).
In its complaint. Old Republic alleges Warners. residents of West Virginia. in order to induce PNC to loan Augusta Apartments $20.648.000.00 secured by a first deed of trust on the apartment complex. entered into an agreement dated December 13. 2006 whereby Warners agreed to guarantee the obligation of Augusta Apartments to indemnify Old Republic for any loss or damage. includingattorneys fees. sustained as a result of mechanic's lien claims arising from construction of the Augusta Apartment complex. Old Republic further claims the guarantee was a condition precedent to Old Republic issuing a title insurance policy on the Apartment complex project without the standard exception for mechanics liens that may arise from the construction of the project and that the PNC loan would not have been made without the title insurance. Old Republic further alleges that Landau Building Company [Landau] constructed the apartment complex; Augusta failed to pay Landau; Landau filed mechanic's liens against the apartment complex; Landau then initiated litigation in state court against Augusta Apartments and PNC to enforce its lien claiming priority over the PNC deed of trust securing the PNC loan. Old Republic further contends it provided a defense of PNC in the state court action and to April 9. 2010 had spent $114.325.94 in defense of the state court litigation. Old Republic seeks a judgment declaring its rights under the agreement pursuant to the Federal Declaratory Judgment Act. 28 U.S.C. §2201 et seq. Old Republic also seeks judgment against Warners for damages it sustained in the defense of the state court action including but not limited to the $114.325.94 allegedly already expended on theories of breach of contract and unjust enrichment.
Warners contend Old Republic's complaint should be dismissed because:
1) the federal court lacks jurisdiction because Old Republic knew a Monongalia County state court action had been filed; did not timely remove that action from state court to federal court; the state court action was tried to the court and was pending a court decision at the time it [Old Republic] filed the within action; and that the Mongalia County State Court action involves claims for attorneys fees;
2) the claims raised by Old Republic are not ripe for action in any court because the Monongalia County state court judge has not made a decision on the action now pending in that court;and.
3) Old Republic failed to join an indispensable party. George B. Armistead. an attorney who drafted the agreement and indemnity provisions and who Warners contend was representing them at the time of drafting and who the Warners therefor claim may be liable to them for any loss because of claimed legal malpractice.
In its response. Old Republic contends:
1) Its complaint. on its face. establishes complete diversity and an amount in controversy in excess of $75.000.00;
2) Cases cited by Warners to support dismissal are inapplicable to the facts of the within case;
3) Collateral estoppel is not appropriate because the issues being litigated in the state action are different from those being litigated in the within action and no final judgment has been reached in the state court action;
4) Claims being raised in the federal action are ripe for adjudication; and
5) Old Republic is not required to join Armistead as an indispensable party.
Motion To Dismiss Standard 12(b)(1)
Defendants motion to dismiss is couched in part in the language ofF.R.Civ.P. 12(b)(1): "lack of subject matter jurisdiction"; in part in the language of F.R.Civ.P. 12(b)(6): "failure to state a claim upon which relief can be granted;" and in part in the language of F.R.Civ.P. 12(b)(7): "failure to join a party under Rule 19."
To the extent the motion is couched in the language of F.R.Civ.P. 12(b)(1). such motion challenges whether this court is permitted to adjudicate the claims brought before it.When a Rule 12(b)(1) motion challenge is raised to the factual basis for subject matter jurisdiction. the burden of proving subject matter jurisdiction is on the plaintiff. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982). In determining whether jurisdiction exists. the district court is to regard the pleadings' allegations as mere evidence on the issue. and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment. Id.; Trentacosta v. Frontier Pacific Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir.1987). The district court should apply the standard applicable to a motion for summary judgment. under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists. Trentacosta, supra, 813 F.2d at 1559 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law. Trentacosta, supra, 813 F.2d at 1558. A district court order dismissing a case on the grounds that the undisputed facts establish a lack of subject matter jurisdiction is a legal determination subject to de novo appellate review. Revene v. Charles County Comm 'rs, 882 F.2d 870, 872 (4th Cir.1989); Shultz v. Dept. of the Army, 886 F.2d 1157, 1159 (9th Cir.1989). Richmond, Fredericksburg & Potomac R. Co. v. U.S., 945 F.2d 765, 768 (4th Cir. 1991).
For purposes of the 12(b)(1) and 12(b)(6) challenges. the following well pleaded facts as set forth in the complaint and attached exhibits are taken as true [Smith v. Smith, 589 F.3d 736, 739 (4th Cir. 2009]: 1) a hold harmless agreement dated December 13. 2006 was entered into between Augusta Apartments. LLC. [Augusta] Old Republic National Title Insurance Company. Benjamin F. Warner. Kristian E. Warner. Monroe P. Warner. and Andrew M. Warner Guarantors. 2) Old Republic was unwilling to issue title insurance unless it was indemnified by Augusta against loss resulting from exception of "any lien. or right to a lien. for services. labor or material heretofore or hereafter rendered or furnished. imposed by law and not shown by the public records." 3) the agreement provided: 4) one of the obligations contractually imposed on Augusta for which Warners agreed to guarantee was Augusta's duty "to indemnify Company [Old Republic] harmless from all liability. loss or damage of any nature. including attorney fees and expenses incurred in enforcing this agreement" and to "indemnify] and... to hold Company [Old Republic] harmless from all liability. loss or damage or any nature. including attorneys' fees and expenses incurred in enforcing [the] agreement. which Company [Old Republic] may sustain resulting from the issuance. either now or in the future of policies of title insurance which indemnify the named insureds in the policies against loss that may result from the Exception." . 5) Landau constructed the Augusta Apartment complex; filed mechanic's liens against the property; and filed a state court action to enforce its liens against the interests of Augusta and PNC; 6) Old Republic provided a defense of the interests of its insured. PNC. in the state court action; 7) Warners are from West Virginia and Old Republic is a foreign corporation; and 8) Old Republic claims it expended $114.325.94 in defense of the state court litigation.
Accordingly. for purposes of the 12(b)(1) motion. no evidence outside of the record is required.
Warners rely on Ballmer v. Babbit, 926 F. Supp. 575 (S.D.W.Va. 1996) and DuPont v. United States, 980 F. Supp. 192 (S.D.W.Va. 1997) in support of their claim this court lacks subject matter jurisdiction. Ballmer filed his complaint seeking declaratory judgment and a permanent injunction against the OSM to prevent them from keeping him on the AVS list as an owner or controller of Great American Coal Company which was found to be in default of its mining reclamation obligations. OSM [Babbit] contended the court lacked subject matter jurisdiction because the complaint challenged regulations. OSM contended only the US District Court for the District of Columbia had jurisdiction to review national rules promulgated under the Surface Mining Control and Reclamation Act [SMCRA]. District Judge Haden of the SDWVa held: ...
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